Economics Homework Three Answers - Student Nine - Revision history

Taj: categorizing

2010-01-29T20:37:36Z

categorizing

Aschlafly: revised

2009-09-28T12:24:39Z

revised

Aschlafly: very good work

2009-09-27T19:00:17Z

very good work

New page

'''Economics Homework #3 '''

Mark B.

'''1.''' Luxury goods have a high price elasticity. An example of a luxury good that would have a high price is a Rolls Royce car.

:I think meant, "An example of a luxury good that would have a high price '''elasticity''' is a Rolls Royce car." Full credit.

'''2.''' Income elasticity is a term used for describing the relationship between the income of people and the demand of a good.

:Close, but need to emphasize that it is the relationship between the '''change''' in the income of people and the '''change''' in the demand of a good. (Minus 1).

'''3.''' A nearly perfectly elastic demand curve is nearly flat. A nearly perfectly inelastic demand curve is nearly vertical.

:Superb, may use as a model.

'''4.''' The name necessity is given to a good that has price elasticity of less than 1 because if the seller increases the price he will not lose revenue.

:Excellent, but the question also asked about a "luxury". (Minus 1).

'''5.''' A substitute for French fries is onion rings, and a complement for them is ketchup.

:Superb.

'''6.''' A normal good is a new car; an inferior good is a used car.

:Excellent, could explain a bit why that is true. Full credit.

'''7.''' There is a shortage, because fewer people want to supply the product at a low price, and more people are willing to buy it.

:Superb.

:Very good work. 68/70.--[[User:Aschlafly|Andy Schlafly]] 15:00, 27 September 2009 (EDT)

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	:Very good work. 68/70.--[[User:Aschlafly\|Andy Schlafly]] 15:00, 27 September 2009 (EDT)		:Very good work. 68/70.--[[User:Aschlafly\|Andy Schlafly]] 15:00, 27 September 2009 (EDT)
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 '''4.'''    The name necessity is given to a good that has price elasticity of less than 1 because if the seller increases the price he will not lose revenue.
-:Excellent, but the question also asked about a "luxury".  (Minus 1).
+:Correct statement about "price elasticity," but see the model answers.  Also, the question further asked about a "luxury".  (Minus 1).
 '''5.'''  A substitute for French fries is onion rings, and a complement for them is ketchup.